Apple vs Epic Games

The legal battle royale for Apple and Epic Games is coming to an end.

The courtroom drama between the tech giant and the “Fortnite” publisher, now in its third week in federal court in Oakland, California, will see Apple CEO Tim Cook take the stand on Friday.

Apple’s lawyers will likely use Cook’s testimony to back up the iPhone company’s claim that its App Store benefits developers like Epic Games, as well as consumers. Those are claims that Apple included in its counterclaim to Epic’s lawsuit accusing Apple and its App Store of violating antitrust law.

“It can be instrumental in describing Apple’s mission to protect the privacy and security of its users through Apple’s integrated development environment, its focus on evaluating and verifying applications prior to launch, and the cost incurred by the application. company to make sure the user has a simple and easy-to-use experience, “said Ari Lightman, professor of marketing and digital media at Carnegie Mellon University Heinz College.

If Apple were forced to moderate the App Store guidelines, the user experience “could diminish,” Lightman said.

Breakdown: Apple v. Epic games

The App Store is at the heart of the legal contest. The ongoing tension took a turn when Epic gave players of its mobile games like “Fortnite” a way to pay directly for items, bypassing the App Store and Google Play Store.

Considering that Apple and Google each get a 30% cut from most purchases made at their online stores, the Epic-priced items generally cost $ 9.99 at those stores to $ 7.99, which gives them players a discount. That led to Apple and Google removing “Fortnite” from their app stores, which not only stopped the influx of new players, but also made it difficult for those who already had the app to update it and keep playing.

Epic sued Apple and Google, arguing that their in-app payment systems, which required a cut in Epic sales, were anti-competitive and monopolistic. Their argument, Lightman said, is that “Apple monopolizes access to its user base by charging exorbitant fees and violated antitrust laws by removing the app from the App Store.”

Rather, Apple argues that Epic violated a contract and, as a result, the company took what it considered “appropriate action” by withdrawing the Fortnite app, he said.

At stake in the test is Apple’s business model for iOS devices, said Jennifer Rie, senior litigation analyst at Bloomberg Intelligence. “It operates iOS like a walled garden, and Epic is looking to force Apple to open up the system to other app vendors and / or other in-app purchases and payment services,” she said. “It would be a major change in the way Apple controls iOS devices and could have a huge impact on its revenue.”

Apple v. Epic: the trial so far

The trial began May 3 with Tim Sweeney, CEO of Cary, North Carolina-based Epic, taking the stand for the first two days of the trial. Some of Sweeney’s statements appeared to bolster Apple’s defense, including his acknowledgment that he personally used an iPhone rather than smartphones running on Google’s Android software because he thought Apple offered better security and privacy controls.

Sweeney also acknowledged that Apple made changes to the iPhone software to help “Fortnite” players compete with each other while one was on a phone and the other on a video game console. This “cross-platform” expansion helped the game grow to more than 400 million users.

Before Cook’s testimony, other Apple executives have been questioned this week, including Michael Schmid, the App Store’s head of game business development, who on Wednesday said Apple had spent $ 1 million marketing for “Fortnite.” in the 11 months prior to its elimination. from the App Store and had made $ 100 million from the game.

Epic Games made $ 700 million on “Fortnite” through the App Store, Apple said earlier in the test.

Apple’s software chief Craig Federighi also took the stand on Wednesday to discuss the various ways the company insulates its products from hackers. “We try to build up a lot of layers of defense,” he said.

While on the booth earlier in the week, Phil Schiller, who is now a member of Apple but previously was the company’s senior vice president of worldwide marketing and was a confidant of the late Apple co-founder Steve Jobs, detailed how Apple developed the app . Store.

When asked if Apple’s 30% commission “is still competitive” by Apple attorney Richard Doren, Schiller said, “We think so,” MarketWatch reported. Schiller added that small business developers with less than $ 1 million in sales now pay 15% commissions as part of a program that went into effect last year. due to the coronavirus pandemic.

And Schiller noted that the App Store has competition from Google Play and app stores from Microsoft, Samsung, Huawei and Amazon, as well as on game consoles like Xbox, PlayStation and Nintendo Switch, the site reported.

Overall, Apple’s goal is to establish that “the iPhone is a unique environment that is very complex and comprehensive to everyday life,” Lightman said. He noted that ensuring the quality control and compatibility of the apps that go on the phone is essential to the overall experience. “This has an impact on Apple’s brand, as there is an association with the iPhone and iOS, even if they are not at fault … It is a complex platform and ecosystem that must be understood to assess the importance of this test.

What does Roblox have to do with this?

During testimony from Apple Marketing Manager Trystan Kosmynka, he was asked if “Roblox” and “Minecraft” were games.

“If you think of a game or app, games are incredibly dynamic, games have a beginning, an end, there are challenges in place,” Kosmynka testified, 9to5Mac reported. “I look at the experiences that are in Roblox similar to the experiences that are in Minecraft. These are maps. These are worlds. And they have limits in terms of what they are capable of.”

Why could this matter? “Because Apple maintains different app review standards for game apps, especially game apps that stream unreviewed game content from the cloud, like Roblox does on iOS,” Ars Technica reported.

The line of questions, The Verge reported, “looked like Epic was trying to establish that Apple is inconsistent – and it was passing the buck.

Interestingly, Roblox has replaced the word “game” with the word “experience” throughout much of its website, The Verge also reported. The Roblox apps for iOS and Android also got a Discover tab to replace the Games tab, though both apps remain classified as games in those stores, the site reported.

What is the definition of a “game” has been a question that has come up numerous times, The Washington Post reported. Epic Games attorneys asked both Steve Allison, vice president and general manager of the Epic Games Store, and Matt Weissinger, vice president of marketing. “Defining what a game is may seem pointless to listeners, but it gets to the heart of the Epic v. Apple antitrust case: narrowing down a market definition to determine whether Apple has a monopoly,” wrote The Post.

Apple or Epic: Who is Winning?

The Associated Press asked on May 9, “Is Epic Games’ confrontation with Apple turning into a mismatch?

For Epic to prevail, the video game company must persuade US District Judge Yvonne González Rogers that Apple’s app store allows the Cupertino, California company to participate in the price increase.

That argument will likely require the judge to accept Epic’s argument that the iPhone software and the app store are large enough to represent a market on their own. That’s been a difficult case to make, largely because the same commission fees have long been charged by similar stores operated by major video game consoles (Microsoft’s Xbox, Sony’s PlayStation, and Nintendo’s Switch), as well as on smartphones and other devices that run on Google. Android system.

“While Epic Games has narrowed down the market definition issues a bit, it doesn’t seem like they have done enough due to the judge’s skepticism about how Epic has defined the market,” Rie said. “He faced an uphill climb from the beginning to convince the judge that a single-brand market is appropriate in this case.”

How important is Tim Cook’s testimony?

Cook’s testimony may be less important than that of various industry experts who testified last week, Rie says, “but his testimony will be important to the justification for Apple’s business model.”

Cook, who has testified before Congress on antitrust issues, has been preparing for his testimony with “hours or practice,” The Wall Street Journal reported.

“This is key testimony for Cook as an App Store and his fee structure represents the gold jewel of Cupertino’s services business,” said Daniel Ives, an analyst at Wedbush Securities, who expects Apple to be the winner in court. . “All eyes are on this testimony as Epic’s lawsuit hits the App Store’s broader fee structure and antitrust whirlpools that remain a risk around Apple’s story in the eyes of the street.”

Cook is likely to be asked to describe “how complex it is to develop and support a smartphone system,” Lightman said, perhaps going into details such as chipsets, carriers and the range of applications available.

“The smartphone is an essential device not only for communication, but also for working, studying, entertaining, etc. and Apple needs to support all of those purposes,” he said.

What happens next?

Both parties are expected to present their closing arguments on Monday and answer the judge’s questions about the evidence.

Even the judge does not believe that his decision is the last word in the confrontation. Before testimony began Thursday, MarketWatch reported, Judge González Rogers said she had not “decided what I’m going to do,” but that “one or both of them will not be happy, so it will go to appeals court.”

Even if the judge sides with Apple and upholds the status quo, Epic could still win if the issues exposed in the trial raise consumer awareness of the different options available to them, said Daniel Lyons, a Boston law professor. College following the case. The Associated Press.

“Even if they lose the case, they have been playing a public opinion court game,” Lyons said. “You spend a few million dollars on lawyers and you are a company that makes the headlines for defending the little one. Maybe that’s a victory in itself. ”

If Apple wins, it still faces obstacles, Rie said. “There are alleged class action lawsuits ongoing against the company by classes of app developers and buyers making similar accusations against Apple as Epic Games,” he said. “These demands have yet to be met. And the Justice Department is investigating Apple and could file a lawsuit, as can state attorneys general. So if Apple wins, it’s not necessarily the end of the story.”



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